Retail vs. Semiconductors

August 16, 2018

Mish's Daily

By Geoff Bysshe

The retail sector was full of action today, but the XRT didn’t move.

This is because the sector is not one in which its members are all benefiting from the stronger consumer and economy.

For example, J.C. Penney, JCP, plunged 25% today. This is it’s biggest down move in history and puts it at it’s lowest price ever (dating back to 1929).

At the same time, Walmart, WMT, gapped up 9% after reporting its strongest sales growth in a decade.

As you probably know the retail ETF, XRT did hit an all-time high earlier this week so today’s fireworks may not have moved the ETF today, but its trend is in tact.

Looking at the other ‘hot’ sector in the market, tech, or more specifically, semiconductors…

After the bell the semiconductor giant, NVDA, reported better than expected earnings, but weaker than expected guidance.

As a result, NVDA is down over 4% as of 6:00 ET.

The semiconductor ETF, SMH, has been struggling to stay above its 200 DMA.

If NVDA is the catalyst for a significant breakdown in the SMH then other areas of the market and modern family are going to have to step up to support the bull market.

We’ve already discussed the fact that XRT is doing all it can to support the market.

Today, IYT matched its swing high and could be poised for a nice breakout. While its daily Real Motion indicators are still weak, its weekly condition is ripe for a sustained move higher if it can break out of its daily consolidation.

KRE has had a boring summer. It’s been stuck between 61 and 63.50 since June.

This, however, has created a consolidation pattern that if broken to the upside, could support an attack on the all-time highs.

If the consumer is strong as indicated by XRT, and interest rates are edging higher, then there’s reason to believe that regional banking could see better days ahead.

S&P 500 (SPY) Today range is the key levels to watch. Under the 280 level is big.

Russell 2000 (IWM) Just noise until it breaks 169 or 166. The swing low is at 164.

Dow (DIA) Key level are the swing high at 256.76

Nasdaq (QQQ) 182.93 is the all-time high, and today’s low 254.24

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